How the unemployment rate is determined

Q: I'm not sure I can accept that numbers separate reality from fiction. Often, the source of those numbers can be troubling. The Labor Department reports jobless and jobs created or lost monthly and the financial world reacts quickly. This is despite the fact that revisions are almost a certainty and could go either way. I would like your research and views on how these numbers are created. -- Cliff Eggleton, Brecksville

The reporting of unemployment rates is as good of an example as any. Some people believe only those receiveing unemployment checks are counted as unemployed. Not true. The statistic is better than that, but not perfect.

The unemployment rate is based on a monthly survey. If people are working, they are counted as employed. If they are seeking work, they are counted as unemployed.

Sounds pretty simple. But what about part-timers?

Well, they're employed for the purpose of this statistic. So with the sorry state of the current economy, is it possible that more people who would like to work 40 hours are actually working fewer hours a week? If so, a simple look at the unemployment rate would understate the problem. This link provides a lot more information about how the monthly survey is conducted.